Ms Daniel, who holds the seat of Goldstein, released a letter she sent to Ombudsman Deborah Glass, Premier Daniel Andrews and Attorney-General Mark Dreyfus detailing alarming allegations raised by staff at the Melbourne Youth Justice Centre at Parkville.
She told federal parliament on Tuesday night that detention centre workers were concerned about the use of solitary confinement which they say was a method to punish children held in detention and to cover for staff shortages.
The confinement could last up to 23 hours a day, multiple days a week.
The use of solitary confinement on detained children is regularly condemned by legal and human rights groups as being an extremely harmful practice.
Ms Daniel said the whistleblowers had "done the right thing".
"A number had concerns about retaliation," she said.
"I call on the Victorian government to guarantee there will not be any reprisals against these individuals."
Ms Daniel said the Victorian government's "excuse for inaction" was "unjustifiable".
She said the Victorian government asked the commonwealth to fund the creation of a single independent body to investigate cruel or degrading treatment.
Correspondence from the Victorian ombudsman indicated it would cost $2.5 million to set up, she said.
Ms Daniel called on Mr Dreyfus to make the money available to test the Victorian government's sincerity.
